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GDP is a very sketchy measure of economic output/performance. GDP as a measure of economic output is fraught with inaccuracies and composition errors. A better measure is to either discount those errors, which in itself becomes more of a subjective exercise, or more prudently just to look at the revenues and expenses of a nation. GDP today is simply Grossly Deceptive Production.

The GDP growth chart since 2000 shows that Portugal, Spain, Ireland and Greece for the vast majority of the last decade on average experienced robust economic growth. The fact is though, however, despite all of that, they are all bankrupt. So even with all the supposed robust growth and cheerleading, significant increases in GDP have: loaded sovereign balance sheets with toxic debt, created unfunded liabilities, a transfer of private debt to the public and a marked decrease in livelihoods. Professor Bernanke, please can you explain?

“Dodd-Frank was a new law. It was passed before we even had knowledge of what really happened. The investigations were going on and they passed Dodd-Frank. Now you got to fund Dodd-Frank. Whenever you do something in a hurry, in the middle of a crisis, you do it wrong.”

Government debt out of control

“Interest rates are virtually zero… We have too much debt, you know the issues. We have too much debt, we don’t have a budget agreement in our Congress. Our founding fathers never intended to have a Federal government as large as we currently have. We never had the growth that we did have in past when we had huge Federal government and Federal budget. We’ve gone from a modest debt in our Federal system to a huge debt in our Federal system. Virtually 25% of our GDP now is spent by the government. That’s wrong.”

If you have not already listened to or read some of the transcripts of the Financial Crisis Inquiry Commission’s analysis into what caused the mortgage mess, take a look. Clearly some of the interviews provide a lot more utility and value than others; there are some participants that have nothing to lose and want to contribute to the exchange like the guys formerly at Deutsche Bank, Greg Lippmann and Eugene Xu. Michael Burry – have a read of The Big Short (by Michael Lewis) for further details regarding him also contributes to the inquiry. These are individuals who made a lot of money by being on the right side of the trade so their insights are imperative. Others such as Blankfein are playing a game, mixing some truths among many lies; all the investment banks were leveraged with toxic junk to the stratosphere; Blankfein has to pretend like they didn’t know as well; well they didn’t for a long period of time, but they realised just before the rest of the herd did, and were able to short change clients like the Abacus deal totally oblitering any fiduciary responsibilities they were supposed to have.

It’s an interesting collection of interviews; it is easy to comment now with such hindsight but those who were able to profit from the mess with such accuracy have every right to re-tell these generational events; to discuss cause and effect. While it has taken 18 months to culminate these findings, a few of these guys could have saved the Commission a lot of time reading ‘Learn Derivatives in 24 Hours Guaranteed!’, ‘Trading for Dummies’ etc., without having to persist with spending so much money and energy in generating findings whose future value is unlikely to be exercised. The inquiry was essentially an event in blame transfer; to ensure regulators and the government at large were not to be held accountable for their complete absence of oversight and inaction; and to mitigate any negativity they received by offsetting that with a greater public frustration at Wall Street; directly at the major firms that underpin this community. What I find most striking is the lack of prosecutions, or, at least, trials of those individuals who committed fraud; it is peculiar that Chris Dodd and Barney Frank, two of the individuals that orchestrated the crisis by proselytising the GSEs, and their federally mandated guarantees of toxic trash are now framing the new legislative works; are things upside-down or is it just me?

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Fisher investments in their own words are a multi-billion dollar company and one of the world’s largest independent investment advisory firms. They have approximately $40 billion under management. Given the events surrounding Bernie Madoff, the investigations into SAC Capital, the trial and prosecution of Raj Rajaratnam and other hedge funds, financial firms should be pursuing […]

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